Magna Mining Moves Forward With Levack Mine Restart

Trevor Hall (0:16)

All right, everybody, welcome back in to Mining Stock Daily and kicking off this Thursday's corporate updates with a big one from Magna Mining. They trade on the TSX with NICU and on the OTCQX with MGMNF. The headline news out of the morning briefing today on MSD and probably the news out of the mining sector is coming out of the Levack Mine within the company. They did report the preliminary economic assessment and quick approval of its restart of production for the mine. So we're going to jump right into this and all things what it means for the company with CEO, Mr. Jason Jessup. Jason, good morning. Congratulations. We knew this was coming, but those numbers, man, we got to jump into this. Can you walk us through the payback and the economics here of Levack and what this report is showing you?

Jason Jessup (1:13)

Yeah, sure thing, Trevor. What really stands out to me is a very, very reasonable capital cost of about $70 million.

Starting January 1st, 2027 and hitting commercial production at, in our commercial full throughput rate is 2200 tons a day, but getting into commercial production by mid-2028, a 0.6 year payback, which is pretty remarkable. And this doesn't take into account some other factors that may come to play such as some of the recent announcements from the Canadian government in this mega productivity deduction. So yeah, we're really excited about it. We think it's a no-brainer to move forward, and that's why our board was able to approve us to move forward. And with the cash we have in our treasury, we're well cashed up to start executing that. So we'll begin ramping up with hiring and getting some more equipment this fall in anticipation for complete restart construction in 2027

Trevor Hall (2:17)

Yeah. You mentioned a little bit of the ore to mill model in there. How does that keep the capital requirements lean relative to a conventional restart here?

Yeah.

Jason Jessup (2:26)

I know that is really the beauty of our business model. So unlike most projects that require their own mill, here in Sudbury, we're very fortunate to have two large processing plants, one owned by Valley and one owned by Glencore, that both have excess capacity in them and fairly significant excess capacity.

So we have agreements in place with Valley right now to process the ore. So they're looking forward to receiving it, and we don't have to invest the capital to build a mill or even expand a mill, or expand tailing storage facilities and then incur those long-term liabilities for that. So it is a great business model for us where we can put the capital into the ground and start generating some revenues fairly quickly.

Trevor Hall (3:13)

A couple of weeks ago, when you and I last chatted up the hill at Beaver Creek, you said the new federal expensing treatment of sustaining capital was material enough to delay that PEA at the time by two weeks. Well, here we are two weeks later. Now that it's baked in, Jason, how much does it actually move the needle for that after-tax returns on Levack?

Jason Jessup (3:35)

Yeah. So from an NPV7 standpoint, based on the understanding we have from it and our assumptions in our PEA, it makes a little over a $5 million NPV difference after-tax. So not as big of an impact as we were thinking. Where we think there could be some much better implications to it, much more positive, will be when we look at the business as a whole, where we're generating revenue from McCready, as well as spending money at Levack, and how that deduction will play over the company as a whole as opposed to just one single project. But yeah, it's still a great benefit to have, and we're really fortunate and appreciative to the government for putting it in place.

Trevor Hall (4:22)

Okay. The net initial funding, $8.6 million. Can you walk us through this number and how it gets to that number just based on those tax credits and commercial capital?

Because this number really stands out to me, Jason. I think it's important to highlight. So break this down for novice people such as myself and why this is such an important number.

Jason Jessup (4:49)

Yeah. So we will be spending, according to the PEA, just over $70 million in the initial 18 months.

Starting in basically Q1 of 2028, we'll start generating some significant revenues. And so that $70 million will be offset by $55 million of pre-production revenues. And then there's the critical minerals investment tax credit. They'll also come into play. So when you put those together, and obviously we're still looking at the capital cost, but yeah, the net is about $8 million to get this into commercial production. So that's why we have such a quick payback. It's very fortunate.